tv Fast Money CNBC July 28, 2009 5:00pm-6:00pm EDT
welcome back, before we go tonight, a big treasury auction tomorrow that may very well impact the bonds market and dictates sentiment, as well, for the market. on the earnings front, we have time warner earnings coming out tomorrow, on the economic front, later on in the week the gdp is coming out, durable goods, all market moves, we'll be covering all of that for you tomorrow. thanks so much for being with us on a busy edition of the "closing bell." "fast money's" up next. it begins right now. thanks for being with us.
live from the nasdaq market site, this is rick santelli and i am in the big apple. melissa lee on assignment. >> whoa, i've been away for a while. i've got to ask this question. what's it like to be rick santelli? a couple of months ago you're nobody, and now you get stopped in airports. >> before we go into that. we have a tradition on the "fast money" center, everybody needs a new name. and i understand your badge was sur, so we are going to call you big sur. >> when i first trading commodities in 1984 i was 6'2", look what it did to me. you should see how many bags of tea i have in that office. let's get down to business. what's the word on the street? hey, the market's been stalling at nine-month highs, still it's at nine-month highs. traders, is this a correction coming? hey, guys --
>> it is a -- hey, rick, good to have you by the way. by the way you want to know what a giant rick is, his daughter is performing tonight in las vegas. 21 years old, los angeles is the name of her group, they're in the championship, rick came here instead of being there. he's a stud. is there a correction coming? absolutely there is. 100 s&p points in two weeks is much too much, folks, you've got to take the money off the table. the market came back nicely, like it's done over the last week or so, but i'm a seller here. >> i'm going to give you a hot debate. first of all, say thank you to me because i'm the one sending you tons of tea and you deserve it. i love guy, guy nails this market at 870. it is not going to go out like this, folks. the market doesn't just wimper out at the top. we need to see more volume coming in, you need to see that big thrust higher, and then, and then you get that big thud up and you know it's over and intraday reversal lower. it doesn't go out with a whimper. >> what do you think big volumes
on tops and bottoms? >> it's an important mantra. we've got two big data points over the last couple of days, great housing numbers, relative to what we've been getting. these aren't the reason for a big turn around, but absolutely stabilization, and the market should've rallied on these -- a line in the sand, we're having trouble getting through it, but that does not mean a big pullback. i'd be amazed if we saw more than a 5% pullback. >> i thought today was effectively a rally. this market could've come in and sold in hard, down double digits at one time. >> did you think it was going to make another comeback in the last ten minutes? >> no, i thought it would pick up steam to the downside. i was surprised it was able to come all the way back. we've digested good news, bad news, and the market still -- >> a correction here takes it down to 925 in the s&p. if you do nothing and wait for it to happen, you're going to be scared when it gets here, selling when you should be
buying. to point out the fact we go down 5% is important. if you sit and do nothing, it's to your -- >> i would take the other side of that. for a 4% or 5% move to over trade this thing, i'd be careful. by tomorrow, this thing could be over and a lot of names, some of the big commodities have already pulled back 5% to 8%, and i don't think you're going to get a whole lot more. but it's been a tough level to get through and i don't think we can go a lot higher with earnings -- >> to get out the over bought, we've been up too many days in a row. >> we were really resilient. you know what? today we've had every opportunity to extend lower in the s&ps, broke below yesterday's low, and you know what, rick, the dollar was strong today. and any time the dollar's strong, i get nervous about the market. >> we're going to stop it right there, joe. my favorite topic is the dollar. let's look at the chart of the day. i'm going to get out the old pen here. hey, i have some toys here. i love this 78/30 level. whether it was in december or
june, we seem to always come down, intraday the dollar index hit it like a champ. what do you think? >> no, that's the level and i think that's the level that's been giving us all reason for pause, but i don't think it's a level we need to worry about. and i think we're going to start to see some dollar strength up to kind of 80 on the dixie, the dollar rallies when people are nervous and scared. and if we get risk appetite and equity appetite opposed to the aversion -- and i think ultimately it's very positive to see this continue. yes, it is, people. it's a transfer ofealth globally. the dollar will continue to weaken if we continue to see the world global economy get stronger. >> i think the dollar can rally here, rick, and you were a gold trader back in the day. you know, look at what gold did today, down $15 like that on a tepid dollar move at best. gold has trouble at 950, a few times now, continues to get sold off at that level. if the dollar continues to strengthen, which i happen to believe it will. >> couple of things.
first of all the chinese are in town, they don't want the value of the dollar to weaken much more while they're sitting here. >> a little experience, they're hanging out in d.c. and the dollar hanging out above 79. >> absolutely. and i agree with guy on this one, if you look at the commitment of trade report, everybody's got the trade on, everyone's short the dollar. that means commodities, specifically energy, which is what karen spoke about last night, energy is going to be weak. because the dollar does not have continued weakness, you will see the commodity sector begin to roll over. >> are we at the point where all of the commodity trades turning out to be a dollar trade in disguise? >> no, i'd say no, in fact -- >> what's the commodity most linked to the dollar? what's the commodity least linked to the dollar? >> oil is most linked and probably gold is most linked. and gold, which had actually been lagging along and staying high with a weaker dollar, it's the one that got punished the most. i actually looked at things like
sugar, coal, iron ore prices, we're starting to see settlement in a few of these commodities that are not just this blanket trade and i said it yesterday, i think there are things you can do there. as we looked at the steel earnings today, u.s. steel began to tell us they are not seeing the rosy second half outlook that a couple of their peers had said. that's an opportunity to buy this thing because we are seeing capacity and utilization going up by mattell into their numbers. the same thing we already knew, weakness is your chance to buy. >> down to 29.35 on july 8th, by july 11th, the stock was trading 43.15. a monster move, i totally disagree with timmy here, goldman sachs upgrades u.s. steel ahead of earnings. i know the analyst over at goldman, he's great, i think he's late, i think this stock corrects the 35 you can buy it there. >> you know what, let's get energy on energy stocks.
they are lower to today, were t not? exxon, chevron, conoco reporting profits later this week. karen, are we going to look at energy in energy? >> i think you're going to see energy to continue to pull back, which is not a bad thing. we had the oih, the old services index went to down to about 90 and all the way back to 108 in a very short amount of time. so that it pulls back a few points today isn't that big of a deal, but i do see it's pulling back a little bit further, that wouldn't be surprising. above 80, we talked about selling some rig, i would still -- i would not buy rig yet. >> across the board, these energy earnings, they're not going to look good, going to be down 50% to 70% year on year. the refiner space which we've talked about in the last couple of days being long, now you have to move to the sidelines and get out of that trade because the refiners are not yet ready to rally. >> different than attack it from the red side of the card, though. >> absolutely, you don't attack it -- >> what is that a little trade
school. >> as we said last night, it's a stronghold. >> stronghold. >> what you want to look at when you're looking specifically at energy itself, rick, it's important to understand that moving forward here, the dynamic will be where you place your bets in terms of speculation, that evil word, are they going to play it? where it's tethered to the futures market or the oil service names? you've got to get your -- >> and it's hard to play from the red side of the card, shorting stocks, they're looking for levels to get in, and i think karen made a great point. i completely over extended like a month or so ago, i think that pulls back. textbook everything right in terms of technically trading. at 54, probably another couple dollars to the downside, but if oil did reverse and goes lower again, we push up to 70 again, looks like we might have failed but gets back down to 62 and 63, it's a $49 stock. >> a couple of stocks had decent runs. conoco around $45 here, i would be cautious because i think there's a lot of headline risk
at $42 you can climb back into this thing. >> the market had been rallying this thing. oil two days ago touched essentially the rally in the middle of june. these things rallied, especially companies like conoco. so they will be the most vulnerable on the way down. >> and when you have the economic recovery and the earnings cycle, everything begins to improve. the energy sector is actually the last to recover. >> well, you know what? so many key things have changed this week. hey, let's look at what's topping the tape. today, health care. hey, drugs listed, they were on the positive side, good earnings from amgen, what do you guys think about the insurers rebounding? joe? >> number one, we've spoken about amgen, the desk about being long amgen, you got the earnings last night, phenomenal earnings, august 13th, the osteoporosis drug goes before the fda. if you trade there, out ahead of august 13th. looking to reload, not playing
the red card. on teva, unbelievable results, the acquisition of bar a couple of years ago, phenomenal for them. and they are going to go out because 70% of their revenue comes from generics, they're going to go out and try and improve that even more. look for them in the m & a space again. >> joe's talked about this one, abbott labs have reported their earnings a week or so ago. they have corrected again the 41.88 low back in april, traded close to 49, the level we talked about for a long time, now pulled back to 45. this 45 level is a 50% correction. play into this all the time. >> go on the attack. >> go on the attack, then, rick, you're half back now at 45. abbott's major drugs don't come off patent until 2017. . >> any trade on the floor in chicago? >> he did. >> irish? >> you can talk about health care without looking at the hmo
stocks, hospital stocks, i don't know if people think the obama administration can't keep it together to get significant health care reform, but these things were on fire. i'm a little bit afraid because i think we could see some meaningful legislative change, but my favorite thing today was out of goldman sachs on aetna -- >> let's hit them. we can pick on them a little bit. >> this is ridiculous, guys. you had aetna on your conviction sell list, you removed it it's now on your sell list. >> are you taking down goldman? >> way to go out on a limb. sell it? >> you can drive a car looking in the rearview mirror, can't you? >> i think that's ridiculous, i don't understand a difference between a sell with conviction and a sell. maybe others do. >> they didn't convince me on the -- >> their quarter numbers were very good, you saw this trickle throughout the space, health management, the sector was strong not just because, you know, the obama sentiment may be waning on the health care package, but these guys are delivering numbers and if you believe that's going to stay status quo, you want to own
these stocks. >> well, i'll tell you what, there are some big deals, we like deals. what's the big deal today? ibm to buy software companies, spss, i think it's one of mine, from the windy city, aren't they? 42% premium and tech stocks are thriving and you want to know why? i'm sorry, it's because it's the washington free zone, isn't it? you always have to get a little political on this. all right, let's banter this around a little bit, karen. is that a blue side of the card we want to buy into that? >> well, you know, these things have had big moves, not 42%. if you can find one, great. obviously you can't touch it here. ibm probably still has many more deals to do. these aren't gigantic deals. tech stocks generally have very, very good balance sheets. we will see more m & a, how you pick the right one -- >> this is the 80th deal they've done over the last seven years and it's because they have cash on the balance sheet. trading about 14 times per share free cash flow. ibm is moving into the software space, people, if you didn't
already know it and that's where they see the higher margins and really where their business has gone. and that's what they told us and guided up from 920 to 970. it's not the place you're going to see the kind of long-term growth, but bigger, it's the margins and that's why software is exciting to them and there's a lot of consolidation. >> well -- constant dollars year-over-year, ibms and user revenues were down, frankly, the quarter wasn't as good as it looked. i thought the quarter previous was much better than this quarter of the stock at 118. we talked about ibm going to 120, they gave us guidance, they said they'd earn between $10 and $11 per share. that gets you $120. i think ibm is long in the tooth in terms of trading it, i love it longer term, but i wouldn't pile in. >> especially if you see a correction like i think we're about to see, ibm trades down to $112 to $113, it happened many times.
>> there you go, you know what sits down there? you remember from your trading days on the floor, you've got a nice price gap sitting between $110.50. point of reference, you're out. they always fill the holes. >> there you go. >> you know what? there's a big story these days, cftc, you know what? they're pretty much blaming traders and speculators and i have a problem with the word speculators. show me an entity that knows tomorrow's closing prices because if you're a speculator, that's what we know, it's the unknown. what i want to know is are they right about going after these traders? hey, guess what? >> what you got? >> i have a guy in chicago. it's john najarian of option monster.com, and i think i'm going to charge you a few bucks, you don't need to stand on my stool, though, you're pretty much in the high end of the tall meter, not like me. >> no, rick, it's a privilege to stand in your spot.
and this place, you know, where the cme, this is where transparency is as you know. so to demonize speculators when they're coming into these markets on the cme whether it happens to be the cme floor in new york or this one here in chicago, the fact that they're doing these things in transparent markets, rather than the over the counter ones, rick, i know i've got your support. >> it's a travesty, if you look at the only that held up during all of the credit crisis that started mid '07, you didn't make it sec, regulators missed everything. the one area that performed terrific was anything that was regulated on the exchange, across the country. now, just in chicago, the cftc should be carved out as the fifth notion on mt. rushmore, that's my opinion. gang, what do you think? >> rick, would we be having the same conversation -- these are the same guys that took financials from the beginning of march up 150%, nobody was --
>> what's the big deal, if they insult crude are down from $140 down to $10. same conversation? >> where you're exactly right and i think all of you agree with this that the speculators can make and lose money, and the problem is that you take supply and demand out of whack when they have regulations like you can't securetize the oil product so they have to roll those futures for the uso, they have to roll for the ung, the natural g gas etf and that's creating this disconnect and unwaiting of the supply and demand. otherwise, you reach equilibrium and you have a market. when you get it out of whack. >> don't you think natural gas being a cash settlement contract has a bit of a different dynamic than the physical delivery that brings your religion every delivery cycle like crude oil? weigh in on this, gang. >> well, i think the difference in natural gas is more players
gravitate to the cash than they do to the physical. natural gas cash happens to be a very, very large market, so i agree with you. financially settled is much different than physically settled. you have a little bit of concern once exploration comes around. >> the bottom -- two points on this real quick, number one, we should look at the treasury who has not defended the value of our currency over the last three or four or five years. >> crying in an empty room and empty house. >> john, i know the answer i get on this desk, but i want to know from you, pal, how much do you think electronic trading has been detrimental to the mold l of trading itself. >> just like you were saying, joe, the men and women on this floor, you could look somebody in the eyes and say i need a market. when you do that electronically, you lose a lot of that. and people can basically be disconnected for a variety of reasons. connectivity problems and or because they just want to walk
away, hey this is too volatile for me. >> another way to look at it. when i watch football games i like to look at the action on the field. if you took a camera and just showed the score board, you're missing a bit of what's going on in the field. there's your electronic trade. >> that's exactly right, rick. >> other part too, without the speculators, you're losing a lot of liquidity in the market where people who are hedging commodities truly need. and on the other side, i think this is where joe's going with this, inflation has been a big problem and using commodities even for people who aren't expecting physical delivery is what they had to do. you can't take away the tools from people who need to be in the market right when they create a situation they need. >> i agree, but i have sort of coming in a different way. let's say it's all true, let's say it's entirely speculators that made the move and all of the commodities. who is going to be the ash or the arbiter?
th how are they going to figure that out? that's ridiculous. >> optionmonster.com, thanks, john. i can't wait to come back. and we've got a lot more on "fast money." stay tuned. on the globe sputtered, it was the growth engine that could, chugging along with the stimulus that is really working. the ambassador pulls out his passport, for the best way to trade, the china story. this company is soaring this year, the ceo joins us after hours, breaks out a fresh profit report. and it's all the buzz on wall street, high frequency, subtrading, what's driving up the price of your trade? when america's market post show continues. oof!
welcome back to "fast money," live at the nasdaq market site, yes this is rick santelli, i am in the big apple. it's time for a little after hours action. hey, we have rental company hertz reporting profits, minutes ago, pretty good guidance, stocks trading down a bit, but you have to put this in perspective, folks. this stock has been on a terror. it's up, what? 80% this year. tremendous, and joining us right here in the studio is the ceo of
hertz, and i'll tell you what, mark, a lot of people used to fly in rent cars, a lot of people used to drive on vacations, now i hear my neighbors saying staycations. >> we've seen for the last 15 weeks in a row advance reservations improving. people are staying home local instead of flying out of the country. in the u.s., for example, people instead of flying to europe for the summer or flying to the caribbean or whenever they were going, they stayed at florida, southern california, and those leisure markets. reservations are showing dvance improvements every single week. and in europe, a big piece of our overall market, spain, france, as well as uk and italy actually advanced reservations for july and august were up over 20% in those countries year-over-year. >> the weaker economies and the euro group -- >> i've got to ask you a question. i heard you on cnbc a couple of weeks ago talking about the fleet it, you were aggressively buying cars. are you going after the
fuel-efficient cars? what type of cars are you going after? >> primarily toyota, nissans, and we are scaling them down, you know. but you'd be surprised to know that in vacation land, right, people want big cars because they have their families with them. so july and august we fleet up in minivans big suvs, anything that can carry the family. but in general, i would say that our fleet is improving in terms of the size of it every single week. so we're actually buying as many cars as we can buy right now. >> is it getting newer? >> we're going to have to put a stall on this. breaking news, comments coming out from the cftc. >> we have comments from gary gentsler saying the cftc is about to come out with a report blaming the speculators for the wild swings in oil prices. here's what he says in a prepared statement. on july 7th, announce to make improvements to bring greater transparency to the markets including enhancements of our trade reports, et cetera.
he goes on to say i believe it's inappropriate to speculate on data that the commission will be releasing in the future, data that none of the commissioners have seen. news reports that the cftc will release the study on energy speculation are both premature and inaccurate. the cftc hearing data will provide critical insight into the role of excessive speculation into energy price discovery. that formal statement coming from the chairman of cftc. >> i think we should all applaud. i like the tone some of that breaking news is taking versus some of our worst fears. and mark, let's get back to you a bit. let's talk more about what your thoughts are -- >> one of the thing, mark, i'd like to know is the read through. how big is your fleet? we know that the companies have been really the lifeline for the american, at least, producers over the last few years. you would stop buying, that was a big thing, you didn't have credit. two questions, are you buying more? is the t.a.r.p. working for you guys? and the next time i rent the
hertz car, it's going to not have 40,000 but 2,000 miles on it. >> we'll see 21 months is our average fleet turn in period now, that'll probably come down to 14 or 15 months over the next 12 months to 18 months. we're buying a lot in the fourth quarter. we're upping our buy every single day. and we're down -- our fleet's down 15% worldwide right now. so we expect that to probably be down more like 6% or 7%, and that's one of our big stories is we're getting a lot of efficiency. 300 basis points of fleet efficiency in the second quarter alone. >> mark, it's been an absolute pleasure. thank you for coming and shares your thoughts on "fast money" and, hey, let's talk about some auto parts for a minute. let's talk and take some positions here. autoparts makers, goodyear, earnings tomorrow. joining us is david silver an analyst from wall street strategies. you know, welcome. and i have to tell you something. you know, i don't drive a new
car, like to drive a 45-year-old. i have a '64 grand prix, my auto parts for old cars are also some demand, whether you own old cars, america, you need auto parts, if they're going to build new ones you're going to have to use auto parts. is this a two-for for you guys? >> it definitely is. you see the auto parts are not doing as poorly as the auto makers. a few of the companies have gone bankrupt already. they've all entered into chapter 11 already. but the point is the future of the auto parts industry is what improves the efficiency of your vehicle. whether or not you have it now or buying a new car, that's why borgwarner's my favorite in the industry. that's really going to take their vehicles as well as the vehicles from around the globe to the next level. >> david, it's my favorite, as well. we've been talking about borgwarner since it was in the teens. valuation can't be that compelling for you. the peg ratio's over 6. i love borgwarner, but is it too
much too fast in this stock? >> it's come a long way very quickly. i do agree with you. some levels around 36 right now, i do think that, you know, we're seeing that a little double top. i think we're going to see a little pullback in all of the auto parts because i don't think the earnings this time around are going to be nearly as good as they were in the first quarter. >> i shorted borgwarner for this earnings coming up. when you do your estimates for these companies, what do you use as the right number for seasonally adjusted auto sales? >> well, that's a great question and lately it's been extremely hard. it's been very difficult to forecast what type of production we're going to see. it's a little easier because production has been laid out by the automakers by general motors for the past six months. so that allows me to really use that figure instead of the actual auto sales. but going through the end of the year, auto sales are still below 10 million units and i don't really think we're going to see this huge jump that a lot of
people expect. yes, this cash for clunkers will give us a little boost, but i don't think that much of a boost. they are using the production models. ford increased production by about 25,000 units. those are what i use to real really -- >> you're not buying into the story that cars are getting older, people are going to ramp up and this big surprise in the seasonally adjusted analyzed rate in autos? >> i think we're eventually going to see it, but not any time soon. >> exactly, we're going to see a little bit of a pull forward from this -- as i said the cash for clunkers deal. beyond that, i don't see too many. a lot of people, i think there's a lot of pent up demand, but the economy is still not -- it's not looking good enough for people to go out and make that second biggest purchase of their lives. >> david, you know what -- >> what do you think, joe. >> we had a conversation with the ceo of hertz and he basically said when people go on vacation, what they are doing behavior. think of the behavior. they still want the suvs.
you know what? when things get better, rick, when the economy turns around, the discretionary purchase in the automobile sector, they're going to still want the suvs. so the whole push to efficient vehicles, once we turn around here in america, we're never weaning ourselves off -- >> and you know what -- that's all about global dynamic. let's look at the globe, stick with it, trade the globe. washington had some visitors, we talked about this today. >> china coming to d.c. hey, maybe that's why the dollar did better. with the goal of improving trade relations, here's what i want to know. do we think that the economic horsepower is there? are we going to see the world turn some better numbers? what do you think, tim? >> well, we know china' turning in better numbers, and the obama team is stressing to china, the u.s. isn't going to bail out the world. the chinese consumer, kudos to you for a plan that focuses on domestic consumption in china. >> i'm going to stop you here. >> i remember interviews long before the credit crisis, what
we need to do in the world is turn china into a consumption economy and u.s. into an export economy. when we've gone from being their best consuming customer, if their own demand picks up, is that really a good thing for the u.s. at this point? >> not a good thing for the u.s. economy if the u.s. consumer is saving more and deleveraging. we know that, talked about it on this show. but it's very good for investment in china and also very good for comforting. joe mentioned the chinese are in town, watch the rhetoric. well guess what? we're going to run, we're going to save more, run smaller deficits, we're going to reel this in, feel comfortable, buy our treasuries, give us enough time to get out of this mess. and in the meantime, why doesn't your economy start pumping on an insular basis, strengthen your currency, china, and maybe we'll be okay. so the trades in china really quickly are the domestic plays. china life, lfc, a big insurance company that's making a lot of money this year because premiums are up, they're making money in the market. that's been a big part of that
trade. the online gamers in china, five plays, we talk about them all the time, making money, high-growth ways to play -- >> chairwoman -- >> well, i agree with what you're saying, what's good for the short-term and the long-term? >> i think for the longer term, it is better for us we become less of a consumer nation. look how well that worked out. this was a complete disaster. so i think, i think the near term pain is worthwhile. i hope we have it because i think it's better for us in the long-term and what you're saying about the price of our debt, that's going to be a disaster for us, as well, if we don't get -- >> hold on for a second. we've got a fast money trader sitting in from chicago. i don't have any good stories from tad trading, but 30-second quick story. >> my greatest story of all. on the trading floors in chicago, and one day everybody was bored, and one of the runners found a big insect on the floor, one of the rich bored traders said, hey, you eat that thing i'll give you $500. we were all grossed out, he took it, put it in his mouth, a
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this is your "fast money" trade school. stocks are going lower just took another hit. is this stock terminally ill? to make your diagnosis, check the volume. a spike in volume in the selloff can signal that all of the sellers have cashed out. giving the shares a chance to go on the mend. this capitulation could be just what the doctor ordered for that sick stock. class dismissed. welcome back to "fast money," what's going on after hours? you know what? i used to love to trade after hours when i was allowed to trade. why? sometimes the markets are fun. you can grab a few extra bucks. isn't that what it's all about? today, data storage, western digital, moving nicely after hours, why? hey, they killed, they beat, what do we think, guys? >> this quarter, 76 cents, look at their shipments, 40 million this year, 31.6 the previous
quarter, inventory's down to 376 million, it was 56 million the same quarter a year ago. these guys are doing things right. valuations are fair, the stock was $12 in march, now north of $30, hard to chase, but i love this story. this is one that's never going away. i still love western digital. >> you've got a very nice call on western digital. >> thanks. >> very good. >> remember the good ones, remember the bad ones -- be honest, absolutely. hey, it's time for my favorite part of the show. pops and drops. the diamonds and the dogs, the bow wows of the day. patriot coal. >> a bow wow, it's down 86% year-over-year, but coal prices have started to come up, from 540 to 870. stay in the trade, it's still good. >> super value, about 2%, karen. >> you know, it was not a great, actually, quarter, but they were able to calm the street. i think people were looking for
something worse. i think it doesn't bode value for who wile foods. >> american express. >> downgraded today. we've been trying to tell you the better trade is mastercard. look at what mastercard has done over the past couple of weeks, 190, you can't chase that now, but that was the play. >> bow wow, office depot down. 18%. >> glad you're being long that one. >> i had a few of those. >> same store sales are horrible for office depot, wouldn't touch it. >> down 11%, tim. >> that name alone is bow wow. but again, this is not a good story in the short run even though long-term these guys will be overbooked by the end of next year. >> senate health care, health care keeps propping up and this one, hey, up 13%. >> they did a nice job and a good day for health care across the board. nice pop for these guys.
>> guy, what do you think? down 2%. >> but this was an $11 stock now trading $28, and a huge run. valuations sort of fair here, they're speaking at a back to mall, back to school mall walk tomorrow in san francisco. that's going to be interesting, but i don't chase this one. >> back to school mall walk. >> mall wac. up 17.7%, joe? >> speculators? >> there aren't any such -- >> got to be speculators. diversified manufacturer, when the ism goes from the trough towards 50, which we're doing right now, rick, diversified manufacturers they do well, that's why textron's up. >> i love pops and drops. we're going to be right back with more "fast money."
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this is your "fast money" trade school. investing in a recession means getting creative. so take a look at bonds. these bonds buy investment grade bonds that give you a nice return or potentially minimizing market volatility. also, exchange trade a ton or etf allow you to take part in market rallies without the risk of individual stocks. remember, you don't need to be a street insider to make money
when times are tough. class dismissed. welcome back to "fast money." live at the nasdaq market site. hey, i think i like this shirt better than the one in the commercial. you're always a dapper guy, buddy. always dapper. >> i'll match you, joe, i think he's making fun of you. >> no, he's not. >> believe me, i'm not making fun of anybody. railroads, every time i look at the landscape around the globe, i talk railroads, hey, heck with that, let's talk about norfolk southern reporting after, hey, after the bell, they're doing out on change. the revenue was a little light. >> a little light on the top line, the rails have had a huge move, it's a great-looking side of the economy, see how we're improving. i don't know, i don't know that you can stay with this trade, csx, reported a little bit better, they've moved a lot right here. these are one of the sectors -- >> get off the rail. >> i think b & i we've talked about buying that close to the 70, now you find it around 78.
if it goes higher, does it without, i think they all pulled back. >> look the transportation guys are giving us a mixed signal, whether the fedex and upss, they've seen the bottom, other guys say we haven't seen it. rail rates are down and have not recovered yet. we're looking to the fourth quarter, but right now, not there. >> thanks, traders. of course, this is pretty exciting. now, it's the ultimate "fast money." high frequency trading slash trading, whatever you want to call it. >> evil. >> it sounds evil. it's accounting now for 50% of the volume on the new york stock exchange. look at this chart. hey, this has been the hot topic everywhere. conspiratorial. is the average guy hurt by that 50%? let's banter it around, gang. >> the average guy, i'm sorry, karen, go ahead. >> i think that's the evolution of the stock market. you think it used to have runners who would take the order down to the floor. that's the way it evolves.
t it's not built for the average guy, it's not supposed to be, but the average guy needs to be aware there's other things going on that he's not doing. >> and you would not be an average girl -- it's a compliment. >> this is the evolution of the markets, if you have the wherewithal, good for you. nothing illegal about it. >> if you're worried about this, you're worried about the wrong things. you should be worried if it's going higher or lower, not flash trading or who's doing what. focus on what you can control, learn your fundamentals and you'll be fine. all of this stuff is conversation for the weekend. >> the inefficiencies on the tick to tick are gone. that's the message here. i think if you're a long-term investor or have a fundamental view or a trading view, trying to trade second to second is very difficult against the machines, it's almost impossible, and, in fact, they've added an extraordinary amount of volatility. they have been vilified and i don't think that's fair. >> well -- >> we're going to have to stop
one second, my buddy from chicago, scott cohn has breaking news. >> more about the allen stanford case, the court-appointed receiver, the guy who is supposed to identify any assets that belong to stanford and recover them for investors is suing some 400 investors. he's seeking claw backs, basically, you put all of your money into these stanford certificates of deposit, which the fcc and the prosecutors say are fraudulent. that money all went into the pool, all was diverted by alan stanford and anybody who had any money left in the accounts that were frozen, that's something to go back to the receivers. these people who have had their accounts frozen from february and in many cases these people with all of their life savings in here, now they're told they're never going to get any of that money back or not the flying share of it, it all has to go back to the receiver. he has filed this in dallas,
140-page filing here among lots of other filings today. basically the receiver is going after the investors seeking clawbacks. it's a common thing in ponzi schemes but adds insult to injury. the securities and exchange commission has said he should not pursue these clawbacks, these people are innocent victims. so he is now effectively going against the people who put him in charge. this suit has been filed on dallas and a big twist for the stanford investors, many of whom have suffered terribly in the last six months. >> these are sad, sad stories. thank you as always. let's get back to the high frequency trading. joe -- >> high interest trading is known as black box trading. let's give our viewers a little insight. what black box trading is. black box trading is when the computer is programmed to identify price swings, basically to understand when a position everyone's in it and too crowded and they're about to roll over, so to speak and all reverse and
get out. the computer tries to go in and actually force them out of the trade and then when everyone goes to get out of the trade, they take the other side of that trade and make the profit. >> another way here, is there a ferrari component to this? where the way these hook-ups are and i understand program trading, the evolution, but can they ferrari around some of the other little information, blocks that go through and get ahead of my order? is that something that's possible? >> i'm going to give you this one real quick, the exchanges will rent space to the entity running the black box right now to put their servers on the exchange so they get the information price reporting, transmitted quicker. >> free markets, but free means fair and free, we'll be right back with more, yes, "fast money."
welcome back to "fast money," i think i'm going to buy a condo down here. you're not going to get rid of me, like doing this show. is the big rally taking a pause for the week? are earnings running over? is this it? in other words, are we going to take a breather, or is more left? we have patty edwards of storehouse partners, she's here
and my question is i know you're from seattle, there's a lot of rain, is green shoots or moss. we know about moss. >> well, it's actually leaf rot that comes when you put too much fertilizer on the ground. you know, i'm looking at this and i know that most people are pretty bullish on this. the number i keep hearing from everybody is that we're going to hit 1,000, we're only 2% from that and the market never does we expect it to. even if not, we're going to have a slight pullback and i think we should get down to about 950 to 940. given that, i want to play it safer. i talked before about phillip morris international and coors, i think both of those are great, get some dividend and buy it stocks, no one gives it up. if i'm wrong, though, the other way i like to play is the jnk, the high yield bond index, you get a 12.7% dividend yield, you get 60% correlation with the stock market, if things go up, you still get 16% of the move.
if things go down -- >> you know what, i kind of like the quality high yield. is that an oxymoron? >> a very nice run-up, as well, but i kind of like that, it's interesting. >> the thing that bothers me, the argument that we can't go through 1,000 the same argument we had, we couldn't go through 900. earnings yields and equities are better than the fixed income side. we do have credit back to pre-lehman levels, isms, other economies growing, despite the fact the earnings growth in the second quarter was not what people wanted it to be. they still beat expectations. i don't know why we have to get stuck here quite honestly. >> patty, what do we do to protect ourselves? i don't necessarily disagree with you. >> well, i think the yields are pretty bad on treasuries, i think you get better yields the further you're willing to go out on the credit quality. and i think that you can protect yourself with that and dividends. >> i'm in agreement with you, patty. we're going to have to go. the final trade after the break.
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>> i'm with karen, bwa. >> the chairman woman. >> earnings next week. >> big joe. >> wells fargo being short, take that short. >> i'll seal you tomorrow, it's 5:00 tiand midnight, more "fast money." you have questions. who can give you the financial advice you need? where will you find the stability and resources to keep you ahead of this rapidly evolving world? these are tough questions. that's why we brought together two of the most powerful names in the industry. introducing morgan stanley smith barney. here to rethink wealth management. here to answer... your questions. morgan stanley smith barney. a new wealth management firm with over 130 years of experience.